ROTH CPA & ASSOCIATES, LLC

10751 Montgomery Road

Cincinnati, OH 45242

513-530-9000

¨ Long-Term Capital Gains and Dividends

           The maximum tax rate on net long-term capital gains remains at            15 percent. For taxpayers in the 10 percent or 15 percent tax            brackets, net long-term capital will be tax-free from 2008 to

           2010. To qualify as a long-term capital gain, the asset must be

           held for more than one year before selling. Capital gains on

           investments held for one year or less are taxed at regular

           income tax rates – as high as 35 percent. For collectibles held

           for more than one year, the maximum capital gains tax rate is

           28 percent. Qualified dividend income from a domestic or

           qualified foreign company is taxed at a top rate of 15 percent

           (5 percent for taxpayers in the 10 percent and 15 percent tax

           brackets).

 

¨ Offset Capital Gains with Losses

           Net capital losses are fully deductible against capital gains. If your            capital losses exceed your capital gains, you can deduct up to            $3,000 in net capital losses against ordinary income ($1,500 if            married filing separately). Any remaining capital losses may be            carried over to the next year.

 

¨ A Tougher Kiddie Tax

              Beginning in 2008, Congress gave the kiddie tax more bite.

           In 2007, a child’s unearned income of $1,700, such as gains

           and dividends, was taxed at the parents’ marginal rate until the

           year the child is 18. Although the threshold increases to $1,800

           in 2008, the age is raised to 19 and, for full-time students

           whose earned income is less than half their support, increased

           to 24 after this year. This way, families can’t shift appreciated

           assets to their kids to take advantage of the 0% rate on capital

           gains, which is discussed above.

 

 

 

 

©2008, American Institute of Certified Public Accountants

 

Tax Considerations for Investors